What next for Pendragon?
30 June 2019
Losing a chief executive three months after hiring them is never great for any company, but when it’s a loss – making listed company it’s doubly bad.
Thursday’s stock market announcement that Mark Herbert was leaving the company didn’t offer an explanation as to why the new chief executive’s term was so short.
It wasn’t only short in terms of his start date, but that his departure came just two weeks after he’d invested more than £90,000 in Pendragon shares.
Itself just a few days after another profit warning. But a profit warning that seemed to at least open up Pendragon and give it a clear turnaround route. These points would suggest things were going to plan then, but maybe not since then.
However, analysts spotted a coded message in the departure statement. In it, chairman Chris Chambers said: “The Board remains fully committed to realising the long-term strategy.”
From this, the analysts believe that Mr Herbert probably wanted to change the strategy – of concentrating on the Car Store used car supermarket push – and it was this difference of opinion that led to his departure.
With this strategy seemingly set in stone it will be very difficult for Pendragon to recruit a new chief executive because it will have to be one willing to toe the line and this could be something that’s very hard given how difficult the overall market is (for both new and used cars) at the moment. On top of this Pendragon doesn’t have the best relationships with its manufacturer partners.
In the past 12 months, I’ve had more than one managing director at a car brand tell me they were actively reviewing their relationship with Pendragon.
This isn’t surprising, the market’s tough and national sales companies need to hit targets just as much as retailers so if there’s better options elsewhere or a network realignment happening then it adds further pressure.
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